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INTEGRATEDIntegratedR EAnnualPORT019Report2 2019

PurposeWe are pleased to presentthis 2019 IntegratedAnnual Report for ShopriteHoldings Limited and itssubsidiaries in its 40th year.Here we report on progress towards delivering on ourvision – to be Africa’s most affordable and accessibleretailer – and how we plan to continue to do so in future.This year’s report underlines our recognition that ourcapital, resources and relationships play an important rolein our success. These range from our strategies andinvestments, which help us provide accessible andaffordable food and other fast-moving consumer goods toour customers, wherever they are, through to our evolvingunderstanding of how to continually pursue shared valuethrough our business performance.For 40 years, the Group focused on lowering prices.In recent years, our focus has shifted from low prices toaffordability, as we provide a range of options to peoplewho may not be able to afford the lowest prices in themarket. We aim to make our customers’ money work ashard as they do.ValuesWe believe that our business model enables us to createsustainable, long-term value that balances the interestsof today’s stakeholders with the interests of futuregenerations.Doing the right thingSaving to shareDeveloping localWe want to be known as a company thatputs customers first through excellentservice. Our employees are empoweredto do whatever it takes to ensure that allcustomers leave our stores happy.We are committed to reducing waste.That’s one reason why we focus relentlesslyon keeping costs low, so that every randwe spend must fight for its life. We aim tobecome more efficient, including in ourresource use, by minimising harm to thenatural environment and maximising thevalue we offer to our customers. Wherewe have surplus food or resources, wedistribute them to people in need.We’re an African company that believes inAfrica’s potential. We invest in our peopleby developing their careers and promotingfrom within. In turn, they invest in us.Integrity is important to us. We treateveryone with respect. Each of us isaccountable for our actions and strivesto behave in an ethical way. We valuetrust and long-term relationships withour stakeholders.We #ActforChange beyond our own doors.Through job creation, affordable products,and hunger relief and other programmes,we work to support our communities.We create jobs, provide suppliers withaccess to markets and contribute taxesto develop local economies.Our size and effective supply chains createopportunities for local, smaller suppliers toaccess our markets. Through procurementand support, we help them grow and thrive.We embrace economic transformationthrough job creation, skills and careerdevelopment, local sourcing and socialupliftment.

Shoprite Holdings LtdIntegrated Annual Report 201924610141718202122283032Good governance and value creationGovernance philosophy Lead Independent Director’sstatementGovernance focus areas in 2019Being a responsible businessThe Group’s leadershipOverview of Board and Committeeactivities in 20193638Remuneration reportPart 1: Chairperson’s letterPart 2: Remuneration policyPart 3: Implementation687076Performance summaryOur Chief Financial Officer’s review79445354545658Shareholder informationShareholder analysis86Shareholders87 Notice to Shoprite Holdings88shareholders: AGMForm of proxyLoose insert64Good governanceand value creationCreatingsustainable valueAbout Shoprite HoldingsOur value creating highlights in 2019What sets us apart Chief Executive’s reportChairperson’s reportOur businessOur brandsKey financial informationDistribution of operationsOur strategic approachOperating environment Transforming our businessEngaging our stakeholdersCreating sustainable valueOur value creating business modelManaging our risks Material issues, risks andopportunitiesAbout ShopriteHoldingsAbout this reportAbout this reportContentsHow to navigate our reportThroughout our Integrated Annual Report, the following icons are used to provide linkages to relevant aspects, or indicate where furtherdetail is available.StakeholdersA truly customer-firstcultureCustomersSupply chain configurationand cost structureDevelop future-fit channelsShareholders andfinanciersRemuneration strategyand policyEnable precision retailingCommunitiesOur employeesTrusted, profitableprivate labelsTrade unionsSocioeconomic impactand contributionGrow share in premiumfood and freshEmployeesInformation andtechnologyA stronger franchise offerSuppliersLeadership transformationand employment equityPreserve ourAfrican advantageRegulatorsRegulatory environmentRefocus capital allocationReferencesUnlock alternative revenueSocial licence to operateThis digital version of the Integrated Annual Report, and theinformation c ontained herein, supersedes the printed version.ShareholderinformationQuality and safety(employees, workplaceand customers)UN SustainableDevelopment GoalsRemunerationreportStrategyTrade performance andgrowth opportunitiesPerformancesummaryMaterial issuesThis icon signifies relatedinformation elsewhere inthis report.This icon signifies relatedinformation available online at:www.shopriteholdings.co.za1

About this reportHow to read this reportAbout this reportThis 2019 Integrated Annual Report is aimed primarily at our shareholders,as the primary providers of the Group’s financial capital, and the local andinternational investment community.About ShopriteHoldingsThe report demonstrates our ongoingcommitment to improving transparencyand striving for the highest reportingand disclosure standards.List of acronymsCreatingsustainable valueAGMB-BBEEAnnual General MeetingGood governanceand value creationBroad-based black economicempowermentCEOChief Executive OfficerCFOChief Financial OfficerCOOChief Operating OfficerDRCDemocratic Republic of CongoDSTIDeferred short-term incentiveDTMCDomestic Treasury ManagementCompanyEBITDAEarnings before interest,income tax, depreciationand amortisationESGEnvironmental, social andgovernanceESPExecutive share planFMCGFast-moving consumer goodsGDPGross domestic productHRHuman resourcesIFRSInternational FinancialReporting Standards IR Integrated ReportingITInformation and technologyJSEJohannesburg Stock ExchangeLTILong-term incentiveROICReturn on invested capitalRSARepublic of South AfricaPwCPricewaterhouseCoopers Inc.SACCAWU South African Commercial,Catering and Allied WorkersUnionSAPSystems, Applications andProducts in Data ProcessingSARSSouth African Revenue ServiceSDGSustainable Development GoalSECSocial and Ethics CommitteeSENSStock Exchange News ServiceSMESmall and medium enterpriseSTIShort-term incentiveTGPTotal guaranteed payUNUnited NationsUSDUnited States dollarVATValue-added taxYESYouth Employment lderinformation2It strives to provide balanced insightsinto how the Group aims to create andsustain value for shareholders in theshort, medium and long term whilebalancing our responsibilities towardsour other stakeholders, recognising theinfluence our key stakeholders have onthe Group as a sustainable business.Forward-looking informationThis report contains forward-lookingstatements regarding the Group’sperformance and prospects, which, unlessotherwise indicated, reflect our bestjudgement and estimates at the time ofpublication. Various factors can causeoutcomes to differ from our forward-lookingstatements, so readers are cautioned not torely unduly on them. The Group does nottake responsibility for updating or revisingany forward-looking statements unlessrequired by legislation or regulation.Overview of the Group’sexternal reporting suiteFor a full understanding of the Group, theIntegrated Annual Report should be readalongside the following reports, whichcomprise the Group’s external reportingsuite:K Annual Financial Statements for 2019K Sustainability Report 2019K Carbon Disclosure Project reportsK Application of the King IV Code ofCorporate Governance PrinciplesAll of these reports areavailable on our website atwww.shopriteholdings.co.za.Basis of reportingThe Group has adopted the InternationalIntegrated Reporting Council’s InternationalIntegrated Reporting IR Framework asthe basis for reporting on a comparable andconsistent basis year-on-year how theGroup creates long-term value through thetransformation of six capitals applied withinthe Group’s business: financial, intellectual,human, manufactured, social andrelationship, and natural capital.All Group financial reporting complies withInternational Financial Reporting Standards,the South African Companies Act and theJSE Listings Requirements.The Board has disclosed the Group’sapplication of the King lV Report onCorporate Governance for South Africa,2016, in the 2019 financial period.For further information on thisIntegrated Annual Report, please contactSarita van Wyk on 27 (0)21 980 4269.Reporting scope and boundaryThe report covers the integratedperformance of the Group’s operations forthe period 2 July 2018 to 30 June 2019.The financial reporting boundary covers theresults of the Group’s subsidiaries of whichthe following are the direct subsidiaries:K Shoprite Checkers (Pty) LtdK Shoprite International LtdK Shoprite Investments LtdK Shoprite Insurance Company LtdK Shoprite DTMC (Pty) LtdThe report provides an overview of theGroup’s operating environment in thecurrent reporting period, its approach tovalue creation, and its strategic risks,opportunities and growth drivers. It alsocovers its stakeholder engagement activitiesand performance for the year.The report covers the Group’s four operatingsegments, namely Supermarkets RSA,Supermarkets Non-RSA, Furniture andOther operating segments. The ShopriteGroup operates primarily in South Africa andhas a presence in 14 other African countries.

Shoprite Holdings LtdIntegrated Annual Report 2019Our disclosure of material matters excludes information that could lead to the loss of ourcompetitive advantage or is considered price sensitive.Material issues for 2019Trade performance andgrowth opportunitiesInformation and technologySupply chain configurationand cost structureLeadership transformationand employment equityRemuneration strategyand policyRegulatory environmentOur employeesQuality and safety(employee, workplace andcustomer)Socioeconomic impactand contributionSocial licence to operateKey risks and opportunities relating to these material issues are disclosed in the report,together with the Group’s strategic focus areas as part of explaining the factorsthat substantially affect the Group’s ability to continue as a sustainable business(see Creating sustainable value on pages 44 to 52.)The Board of Directors of Shoprite Holdingsis responsible for the Integrated AnnualReport. The Board believes that thisIntegrated Annual Report complies with the IR Framework in all material respects.The Board further confirms that thisIntegrated Annual Report fairly representsthe Group’s performance for the periodunder review as well as the growth strategies,material issues, risks and opportunities, andprospects of the Group. The Audit and RiskCommittee has oversight responsibility forthe integrity of the Integrated Annual Reportand recommended it for approval. TheBoard has unanimously approved theIntegrated Annual Report for release toshareholders.Good governanceand value creationThe materiality test applied by the Board is based on internal and external matters, bothpositive and negative, that substantively affect the Group’s ability to deliver its strategyand that could have a material impact on revenue and profitability.Board/executive approvalRemunerationreportThe Group’s executive team, in consultation with management, has identified thematerial issues, positive and negative, that management believes are most likely tosubstantively affect the Group’s ability to execute its strategy to create sustainable value,including matters that could materially impact revenue and profitability. In determiningthese issues, the team considers internal and external factors, including the economicand trading environment, the Group’s strategy, and the needs, expectations andconcerns of our key stakeholders.PerformancesummaryWe have applied the principle of materiality in developing the Integrated Annual Report,with a focus on information that the directors believe is material to investors’understanding of the Group’s ability to create value in the short, medium and longer term.Christo WieseChairpersonShareholderinformationDetermining materialityThe Group’s external auditor[PricewaterhouseCoopers (PwC)] hasexpressed an unqualified audit opinion forthe reporting period and provided externalassurance services for the Annual FinancialStatements. Management has also reviewedthe accuracy of the financial informationextracted from the Annual FinancialStatements that appears in the IntegratedAnnual Report.About ShopriteHoldingsThe content of the Integrated Annual Reporthas been reviewed and approved by theBoard, with management verifying theprocesses and information applied todevelop the report. It has not beenexternally assured.Creatingsustainable valueThe Group applies a combined assurancemodel to support the integrity of informationcontained in the Group’s external reports,the effectiveness of which is subject toBoard oversight. For more information,refer to page 63.About this reportAssurancePieter EngelbrechtChief Executive Officer19 August 20193

About Shoprite HoldingsOur value creating highlights in 2019About this reportShareholdersand fundersAbout ShopriteHoldingsEmployeesCreatingsustainable valueCustomersGood governanceand value creationEnvironmentR150.4 billionR6.9 billionturnovertrading profit3 175jobs5 079created in thefinancial yearunemployedyouth trainedon lionin South AfricaR5 deli meals soldRecycled3 995tonsReused& recycled36 439 tons ofcardboard fromour storesRemunerationreportof plastic fromour storesSocietyPerformance

resource use, by minimising harm to the natural environment and maximising the value we offer to our customers. Where we have surplus food or resources, we distribute them to people in need. Purpose We are pleased to present this 2019 Integrated Annual Report for Shoprite Holdings Limited and its subsidiaries in its 40th year. Here we report on progress towards delivering on our vision – to .